Buying a house and consolidating debt
0 per month of your income is needed to offset that debt to not hurt your qualifying ability.If this balance could be spread out over say 2 to 3 credit cards each with a lower payment totaling less than 0 per month, you come out ahead as the lender is going to use the minimum monthly payment that's due each month.Most lenders work with the debt to income ratio of approximately 45%.Meaning 45% of your monthly pretax income is allowed for a proposed new mortgage payment plus any consumer obligations.In other words for buying a house, you're going to want to focus on the cards that have the highest monthly payment despite the interest rate because those are the ones that will your qualifying ability the most.Lenders are required to use a debt to income ratio in determining how much of a house payment you can take on.The higher the monthly payment on any individual card, the higher the chances you will not be able to purchase much house.For example let's say you owe ,000 on a credit card, the monthly payment associated with the obligation is 0 per month.
Scott Sheldon is Senior Loan Officer and consumer advocate based in Sonoma County. Are your accounts being turned over to debt collectors?Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. Your financial situation doesn’t have to go from bad to worse.Consolidating any 0% interest credit cards or even other credit cards into one credit account containing a total new lower payment will help you qualify to buy a home. It has to do specifically with the minimum monthly payment.Even if you choose to make a pre-payment each month in an effort to accelerate the debt payoff, it's about the minimum obligation per credit card the lender will use in determining whether or not you'll be able to buy that house- so consolidating may help.